Xi pushes ahead with ‘Made in China 2025’ policy

President Xi Jinping has reiterated his call for China to break through the innovation barrier and wean itself off imported technology. In an opening address at the Chinese Academy of Sciences, he urged the country’s scientific elite to transform the world’s second-largest economy into a global high-tech leader.

At the heart of his speech was a simple message – China must become self-sufficient when it comes to technology, reinforcing his “Made in China 2025” vision.

“Self-determination and innovation is the unavoidable path … to climb to the world’s top as a leading player in technology,” he told an audience packed with scientists and engineers. “We [should] hold innovative development tightly in our own hands.

“[We have to] put much effort in key areas where we are facing bottlenecks … and make breakthroughs as soon as we can,” he added.

Xi’s comments on Monday will resonate in Washington after President Donald Trump launched a campaign last month to curtail the “Made in China 2025” program, which involves massive state-subsidies to the country’s tech sector.

Heads to China

It also comes just days before the United States Commerce Secretary, Wilbur Ross, heads to China for round three of trade talks after both sides rolled out proposed tariffs on a range of imported products worth up to US$100 billion.

“He is [aiming to negotiate] a framework [that could turn into] binding agreements,” Steven Mnuchin, the Treasury Secretary, told CNBC.

Still, just hours after Xi’s remarks in Beijing, China and US envoys were slugging it out at the World Trade Organization in Geneva.

The spate involved claims by the White House that China is stealing American technology, which is the subject of two lawsuits.

Dennis Shea, the US ambassador, stressed that “forced technology transfer” was often an unwritten rule for foreign companies trying to access the country’s burgeoning market, especially in joint ventures with state-owned or state-directed Chinese firms.

“This is not the rule of law. In fact, it is China’s laws themselves that enable this coercion,” Shea told the WTO’s dispute settlement body.

“Fundamentally, China has made the decision to engage in a systematic, state-directed, and non-market pursuit of other [WTO] members’ cutting-edge technology in service of China’s industrial policy.”

Nations would see their competitiveness eroded if these policies were left unchecked, Shea pointed out.

Rejected the criticism

But China’s Ambassador Zhang Xiangchen flatly rejected the criticism, which has spawned WTO disputes from both sides.

“There is no forced technology transfer in China,” Zhang Xiangchen told the meeting, adding that the US argument involved a “presumption of guilt.”

“But the fact is, nothing in these regulatory measures requires technology transfer from foreign companies,” he stated.

Technology transfer was a normal commercial activity that benefited the US, he continued, while Chinese innovation was fueled by “the diligence and entrepreneurship of the Chinese people, investment in education and research, and efforts to improve the protection of intellectual property.”

Along with Xi’s latest address, this will simply stiffen Washington’s resolve in the up and coming trade talks in Beijing.

– with additional reporting from Reuters